It’s been over four years since I moved to a less expensive area to be debt free as a single mother of two on a moderate income – and the impact it has had on my finances has been life changing. .
I moved to my current city because the lower cost of living was attractive. I pay $700 in rent and as a result I have been able to clear all my debts, build up five figure savings and invest for my future and that of my children.
The strategy of moving from place to place for a cheaper cost of living is called “geo arbitrage”. It helps people save money and find financial independence faster. You don’t have to move permanently. Even a short move of a few years can have a huge impact on your financial life, if you budget accordingly.
This move, however, required some sacrifices, like giving up square footage and settling for low light due to few windows in my apartment. I also gave up access to nearby restaurants and activities, which I loved the most when I lived in downtown Little Rock. Above all, I wanted to create a safe environment for my family.
All in all, it was worth it for my kids and me. Here’s why I did it, and how you can do the same.
How geo-arbitrage worked for me
I started my debt-free journey in September 2016, when I was making around $32,000 a year. I knew I could get more out of my income if I lowered my housing costs. Newly free of childcare costs, I moved into an apartment $20 cheaper than the previous one, but soon found out I was pregnant again.
With childcare back in the budget, I calculated how much I would need to maintain the same debt repayment. I made the decision to move to an even cheaper apartment once my lease ended. The rent was $125 less and came with free water which saved me another $55.
I needed $200 a month to keep my debt down, and this move saved me $180, so I knew I only needed a minimum of $20 in side hustles to continue to progress. With my writing degree, I started freelance writing for individuals and companies on nights and weekends, earning up to $400 a month.
Then, in 2019, I launched Mom patronizes money with the intention of representing a missing population in the personal finance community – single women.
My big move
One thing that really helped me maximize an area with a lower cost of living was having a plan. Instead of using the money I saved in rent on discretionary spending, I intended to allocate it to areas of my budget that would further my financial journey.
When I moved after the birth of my second child, I signed a one-year lease. Using my lease end date as the target end date for my goal planning, I worked my numbers to see what debts I could clear. Having a work budget made this part easier because I already knew how much my monthly expenses were costing me compared to my income.
As you reduce your expenses by moving to a less expensive area, make sure your lifestyle expenses don’t increase. It’s called lifestyle inflation and it’s something you don’t want to fall victim to. Keep your expenses relatively the same so you can enjoy your new lifestyle.
By my calculations, I could pay off the rest of my car loan and my last credit card before the end of my lease. It gave me the confidence and motivation to stick to my budget so I could keep making extra payments.
A month before the end of my lease, I became free of all credit card and car loan debt. And it gave me the freedom to spend to move to a better apartment across town.
Search different places
When it comes to areas with a lower cost of living, research is very important. This is especially true when you have children.
Various factors must be taken into account, such as:
- Cost of Living – You want to make sure the difference in cost will actually be worth the trip.
- School Zones – You want your zone to be zoned for high quality schools.
- Access to health care — You want to be sure that if anything happens to your children, they will get the health care they need.
- Access to quality food—Make sure there are grocery stores stocked with healthy foods. It was important for me to make sure that my region was not a food desert.
- Safety – Ensuring my children are safe has always been my primary concern.
- Distance from your work/business – I kept my commute relatively the same when I moved. It helped me stay on track with my gas expenses.
- Nearby activities — I want to make sure my children have access to after-school activities near me.
Although the area I chose was two cities away from my old apartment and my old job, the savings still made the move quite worthwhile and only added an extra 15 minute commute to at work.
Of course, there are downsides in my area. My car has been broken into more than once and the crime rate is higher than I would like. I often thank God that me and my children have remained safe all these years. Above savings, safety is my top priority, so during my apartment search, I intended to rent in an area surrounded by close neighbors and closer to new developments in town. It has helped me form great friendships with my neighbors who all help me feel safe.
Keep your expenses the same
When moving to a less expensive area, try to keep your expenses relatively the same. This helps you maximize the cost of living as the gap between your income and expenses widens. You don’t want to fall victim to a lifestyle change, which is when you increase your expenses as your income increases. This is especially true when you see more money in your budget.
Since I’ve dealt with an insidious lifestyle before, I wrote down my goals and created a mock budget using my new income to proactively plan where my money would be best spent. And that way, I could visually see the effect that adding new expenses would have on my finances.
I was using the majority of my disposable income to help pay off my debts, and as the balances went down, my disposable income grew even more. It helped my gap after bills went from $100 to over $1200 a month.
Then, when I got annual raises or was promoted to a higher paying position, my pay raise grew even longer because I intended to keep all my expenses relatively the same.
After my first promotion, I kept the same prepaid phone plan, apartment and continued to drive my old car. That way, the “extra money” I was earning was literally just extra money.
Today, I now live with 55% of my income. Yes, it’s hard to stay motivated due to lack of maintenance and delinquency in my area, but I know I wouldn’t have been able to make as much as I have with my income if I hadn’t taken the decision to lower my housing costs.
So, is it worth it? In my opinion, Yes it is.
It’s an amazing feeling not to be down to my last bucks before payday. I used to be unable to take care of my children properly financially, but now I regularly invest in them. Having been raised as a single mother myself, moving to a less expensive area has allowed me to break the cycle of financial insecurity, and it’s well worth the effort.